Enterprise resource planning systems (ERPs) or ERP software have become popular and necessary tools for any business and this has made it necessary for professionals to learn how to use ERP software to achieve better results.
More managers continue to embrace the idea of having business processes maintained and compiled in one comprehensive package.
A 2019 report shows more than 50% of businesses plan to put in place or upgrade their current ERP system. This explains why the enterprise resource planning software market continues to grow rapidly as more businesses continue to get on board.
Research shows the ERP system market will grow at a CAGR of over 8% and hit a market value of over $60 billion by 2024.
This article will help you understand what ERP Software is and how to use it.
Let’s get started.
What an ERP System Is and How to Use ERP Software
An ERP system is software that controls, manages, and integrate business functions and processes through complementary and interconnected modules.
Businesses use an enterprise resource planning system mainly to boost inter-departmental communication, optimize processes, and enhance reliable access to all business operations.
Key functions of ERP systems include inventory management, supply chain management, customer relationship management, accounting, shipping, delivery planning, sales, timesheets, and many more.
ERP systems integrate business processes, boost visibility in daily operations, and enhance decision making.
What are the Different Types Of ERP Systems
Three main types of ERP implementations exist. These are on-premise, hybrid, and cloud-based systems. Each ERP implementation system comes with different functions, features, and tools.
On-premise ERP
You install and run an on-premise ERP software system on in-house servers in locations under your control. It offers the control and security of using personal IT infrastructure that connects to your people, systems, and processes.
On-premise ERPs are easier to customize and change to your specific business needs. They are ideal for businesses that need to secure and supervise system data. You need specific integration with other systems for your daily business processes. You also need dedicated IT resources to handle application and server maintenance.
Cloud-based ERP
This is an ERP software solution hosted on a cloud computing platform, as opposed to on-premise systems that run on-site. It allows businesses to access services through the internet.
Vendors host cloud ERP software and provide it to businesses. This eliminates downside factors like upfront licensing fees.
Demand for ERP cloud software continues to grow and according to GlobeNewswire is expected to reach a CAGR of over 17 percent from 2020 to 2025. Demand growth comes from the capability to analyze and access data in real-time.
Hybrid ERP
A hybrid ERP or two-tier model ERP suite combines both on-premise and cloud ERP functions and capabilities. It is a modular ERP application, a multi-sourced system for modern digital enterprises.
A two-tier model refers to a hybrid ERP architecture with ERP capabilities preserved in an on-premises solution and ERP applications deployed on the cloud. Your business uses the current on-premises ERP system to handle corporate functions and adds cloud ERP software to support small business units.
How To Use ERP Software
Purchasing an ERP system is a huge investment for any business so you have to make the best out of it. When fully utilized, ERP systems boost efficiency, quality, cut costs & errors, and improve your businesses’ performance, productivity, and profitability.
Getting the most out of your ERP system entails more than installation. Since it’s a huge investment, ensure you get and enjoy all the benefits it offers.
Review Your Business Processes
When identifying an ERP system, it’s important to perform a process review of your business operations. It helps you take note of the changes that have occurred and the way your ERP streamlines business processes.
If you identify anything in your system that’s outdated and doesn’t match your current business processes, you avoid major issues down the road. It also helps you plan for change and identify the various processes that need upgrading.
Invest In Training
You should never underestimate the value that comes with training your employees and other end-users of your ERP solution. Trained users remain crucial to the success of your system and use it to its full potential.
Many businesses make the mistake of assuming that initial training is enough to get your users going. However, this isn’t the case. ERP systems continue to advance so should your employees and users.
Working with your ERP provider and setting up training programs for new employees and current users allows them to leverage new functions on your ERP upgrades.
Focus on Data Quality
Your ERP system helps you manage the why, when, where, and how of data flow, and the quality of data passing through your system determines its value.
Performing data quality audits while performing batch cleansing allows you to identify and execute business intelligence policies. To make the most out of your system, integrate your data audits with your policies. It allows you to secure your data and improves business efficiency and profitability.
Customize Your ERP Platform
Most ERP software comes as a fits-all solution developed to suit all types of businesses. So, designing an out-of-the-box solution that fits your business needs is one way of ensuring you get the most out of your ERP software.
For the best results, ask your service provider to help you customize your system. Some of the customizations you can expect include concealing unnecessary fields, turning specific features on or off, adding required fields, and many more.
Customization is the secret to enhancing ERP system efficiency.
Future-proof Your ERP System
ERP systems continue coming up, with advanced options getting on the market frequently. So, when you maintain a roadmap and define constant improvement of your ERP system, you can sleep soundly knowing your software fits is future proof.
One way of achieving this is by keeping your ERP software up-to-date. If your ERP provider offers constant improvements and upgrades, plan to get such upgrades whenever possible.
Consider Integration Capabilities
If you want to improve your business’s operational efficiency, consider ERP integration. Common ERP system integration tools include Manufacturing ERP software, Customer Relationship Management (CRM), Supply Chain Management (SCM), and Warehouse Management Systems (WMS).
ERP Integration tools reduce data irregularities, offer data visibility across systems, and improve business efficiency.
Leverage Mobile Apps
Leveraging mobile apps comes with many benefits. Mobile apps provide transparency and improve visibility into your ERP data and metrics.
It also allows your employees and users to easily access crucial information remotely and on the go. You stay up-to-date with current and future operations within your ERP system.
Consider The Total Cost of Ownership (TCO)
Investing in an ERP system is a huge investment for most businesses. A cost-conscious business setting up a system should look at the total cost of ownership. The software costs money and depending on the solution you choose consider other factors like hardware, internal resources, maintenance & future upgrade costs, and many more.
Ensure Your Senior Management Is On Board
Senior management buy-in is a key predictor of how the implementation of your ERP system goes. It's not a must that your upper management gets involved in the implementation process. However, collaborating with them allows for proper resource planning, which is often a significant success factor during the implementation process.
Establish A Cross-functional Team
For a smooth implementation process, set up an implementation team composed of individuals from different departments. It ensures that all key areas of your business are addressed and helps to create a buy-in that drives the overall success of the project.
Ultimately, all organizational functions become integrated into your ERP system
Deploy Your Modules In Chunks
To ensure the implementation process remains fast and your system’s efficiency improves, always deploy your applications one at a time. For instance, install your HR applications first and ensure they run smoothly.
Once they are up and running, install another module like accounting and payroll. Converting and implementing many modules at once can be a huge, costly mistake.
Measure Your System’s Lifespan
The ROI you get from your ERP system determines whether it was a viable decision for the business. It fluctuates over time and may need you to adjust and track your goals from time to time.
The ideal system should offer you value for your money and an impressive ROI.
Conclusion
Although many businesses use ERP software, not all experience their full potential of their ERP systems. So, understanding capabilities and functions help you get the most out of your system/software. The most important thing is to choose a system that suits the specific needs of your business and industry.
Many managers make the mistake of overlooking crucial considerations like establishing a diverse implementation team, bringing senior management on board, ignoring training, overlooking system upgrades, and failing to plan for the future.
Your ERP system is a vital tool for the success of your business because it helps you increase efficiency, reduce errors, boost productivity, and ultimately improve profitability.
While understanding how your ERP system works to allow you to get the most out of it, the way your employees and users leverage it determines its value. Though costly, the right ERP system should offer you impressive ROI in the long run.